CHHOTALAL PRABHUDAS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN this case, at the instance of the assessee, the following question has been referred to this court for its opinion :

(2.) THE assessment year with which we are concerned is the year 1969 -70, the relevant previous year being samvat year 2024. The assessee is a HUF and the assessee seemed to be carrying on the business of brick -making, being potters by caste. The assessee purchased survey No. 41 - two acres and twenty gunthas - and survey No. 51 admeasuring two acres and twenty -nine gunthas, by a sale deed dated 27th February, 1930. By another sale deed dated July 15, 1933, the assessee family purchased the adjoining survey No. 42 and all these three survey numbers seems to have been utilised for the purpose of excavation so that bricks might be made. Even brick -kilns were installed in one or the other of these three survey numbers. After the date of purchase by the HUF, survey No. 41 was subdivided into two survey Nos. 41/1 admeasuring twenty -seven gunthas and No. 41/2 admeasuring two acres, two gunthas; survey No. 51 was already sub -divided into two survey numbers, survey No. 51/1 admeasuring one acre, nine gunthas and survey No. 51/2 admeasuring one acre, ten gunthas. In 1958, these survey Nos. of Usmanpura village in Daskroi Taluka of Ahmedabad District came within the municipal limits of the Ahmedabad Municipal Corporation and in 1959, town planning scheme, being Town Planning Scheme No. 19, was applied in this area. In the beginning, that is immediately after the lands were purchased in 1930 and 1933, they were used for agricultural purposes. Thereafter, the land was put to non -agricultural use, that is, for manufacturing of bricks. This continued up to 1952. In 1952, the assessee applied to the Collector of Ahmedabad for discontinuance of non -agricultural use of the land, namely, of brick -making, and that permission for discontinuance of non -agricultural use was granted and from 1951 -52 onwards, the lands were assessed to land revenue on the footing that they were agricultural lands. For some years after 1952, the lands were lying fallow and in later years, grass was found to be growing on these lands according to the entries in the panipatraks and in the records of rights. Thereafter, that is, some time in 1959 -60 onwards, the lands were being utilised, at least in part, for cultivation of juvar and from 1963 -64, the lands were exclusively used for cultivation of juvar. An agreement of sale of a portion of these lands was entered into on December 22, 1966, and in pursuance of this agreement of sale, the lands were sold by several documents in the year 1968. One plot of 603 square yards was sold to Shivlal Khetsibhai on April 23, 1968. Five plots of land aggregating 2,869 square yards were sold to Ilora Park Co -operative Housing Society by five deeds of sale dated June 1, 1969, five plots of land aggregating 2,655 square yards were sold to Ajanta Park Co -operative Housing Society by five sale deeds dated June 27, 1968. Five plots of land aggregating 3,961 square yards were sold to Harisiddh Co -operative Housing Society on June 27, 1968, and eight plots of land aggregating 5,021 square yards were sold to Elephanta Co -operative Housing Society by eight deeds of sale, all dated August 6, 1968. Thus, by these transactions, the lands were sold and gross capital gains aggregating Rs. 8,13,353 seem to have been realised by the assessee after the sale of 15,109 square yards of lands. It may be pointed out that the total areas of the land owned by the assessee came to seven acres and thirty -three gunthas, that is, more than thirty -five thousand square yards, and out of that large area, the assessee -family sold 15,109 square yards. Before the sales were effected, the assessee had applied for permission from the Collector of Ahmedabad under s. 63 of the Bombay Tenancy and Agricultural Lands Act, by making an application in that behalf on January 19, 1968, and the permission was granted for effecting the sales in favour of non -agriculturists on certain terms and conditions. Permission was granted by the Collector on March 12, 1968. It was after the lands ware transferred by the assessee -family that the respective purchasers obtained permission from the Collector for using the lands purchased by them for non -agricultural purposes under s. 65 of the Bombay Land Revenue Code. That permission was obtained on October 27, 1969. In the course of the assessment proceedings and, thereafter on the record of this case, entries from the revenue records of panipatraks were produced in connection with the lands belonging to the assessee -family, and entires in the revenue records of the years 1929 -30 to 1966 -67 have been produced on the record of the case.

(3.) ENTRIES from the revenue records and the panipatraks go to show that these lands, immediately after the purchase in 1930 -33, were stated to be used for excavation purposes and, in survey No. 41/1, a kiln for baking bricks was installed in 1940 -41, this kiln for brick manufacturing seems to have been continued to be in use right down till 1952 -53, and thereafter, we find entries in respect of survey No. 41/1 showing that in 1952 -53, this survey No. was used for growing juvar and bajri, and partly the land was lying fallow. For 1954 -55, 1955 -56 and 1956 -57, the land was lying fallow and from 1957 -58 to 1958 -59, grass was found to be growing and from 1959 -60 onwards, the land was used partly for growing grass and partly for growing juvar. This state of affairs, namely, partly growing of grass and partly growing of juvar, continued on this land till 1962 -63 and from 1963 -64 onwards, the land was entirely used for growing juvar. Survey No. 41/2, admeasuring two acres two gunthas, was used for excavation purposes from 1930 -31 to 1936 -37. For two years 1937 -38 and 1938 -39, it was fallow land and grass also growing on that land. From 1939 -40 till 1952 -53, the land was used for a kiln for making bricks and for the years 1953 -54 to 1956 -57, the land was lying fallow. For the years 1957 -58 and 1958 -59, grass was found to be growing and from 1959 -60 onwards, the land was partly used for growing grass and partly for growing juvar. This part utilisation for growing grass and part utilisation for growing juvar continued from 1959 -60 to 1962 -63 and from 1963 -64 till 1966 -67, the land was used only for growing juvar.